Question 1

Buyer power tends to be higher if suppliers provide undifferentiated or standard products.

Accepted Answer

A buyer group is powerful when the products it purchases from the industry are standard or undifferentiated. Confident they can always find alternative suppliers, buyers play one company against the other.

Question 2

Globalization provides opportunities to access larger potential markets and a narrow base of production factors such as raw materials, labor, skilled managers, and technical professionals.

Accepted Answer

Globalization provides both opportunities to access larger potential markets and a broad base of production factors such as raw materials, labor, skilled managers, and technical professionals. However, such endeavors also carry many political, social, and economic risks.

Question 3

Research shows that many immigrants to the United States are prodigious job creators. This supports legislative battles to increase the number of H-1B visas for foreign workers.

Accepted Answer

In 2014, companies applied for 172,500 H-1B visas. This means that at least 87,500 engineers, developers, and others couldn't take jobs in the United States. As one would expect, this is a political hot potato for industry executives as well as U.S. labor and worker rights groups. The key arguments against H-1B visas are that H-1B workers drive down wages and take jobs from Americans. Actual statistics show that immigrants are more than twice as likely to found a company as are native-born citizens. They started 28 percent of all new U.S. businesses in 2011, despite accounting for just 12.9 percent of the total population. And in Silicon Valley, the percentage of new companies started by foreign-born entrepreneurs was a remarkable 43.9 percent during 2006-2012.

Question 4

Crowdsourcing is used by companies to develop products.

Accepted Answer

In June 2006, Wired magazine defined crowdsourcing as the tapping of the latent talent of the (online) crowd. It has become the term of choice for a process that is infiltrating many aspects of business life and has claimed some well-known successes, particularly on the product development front.

Question 5

Supplier power tends to be highest in industries where products are vital to buyers, where switching from one supplier to another is very costly, and where there are many suppliers.

Accepted Answer

A supplier group will be powerful when the supplier group is dominated by a few companies, the supplier product is an important input to the buyer business, or the supplier has built up switching costs for the buyer.

Question 6

In some industries, high switching costs can act as an important barrier to entry.

Accepted Answer

A barrier to entry is created by the existence of one-time costs that the buyer faces when switching from one supplier product or service to another.

Question 7

There is generally a weak relationship between equity markets (e.g., New York Stock Exchange) and economic indicators.

Accepted Answer

Economic indicators are associated with equity markets. When stock market indexes increase, consumer discretionary income rises and there is often an increased demand for luxury items such as jewelry and automobiles.

Question 8

The Internet is a leading component in the rising emergence of digital technology.

Accepted Answer

The Internet has been a leading and highly visible component of a broader technological phenomenon-the emergence of digital technology. These technologies are altering the way business is conducted and are having an effect on nearly every business domain.

Question 9

Industries characterized by high economies of scale typically attract fewer new entrants.

Accepted Answer

Economies of scale refers to spreading the costs of production over the number of units produced. The cost of a product per unit declines as the absolute volume per period increases. This deters entry by forcing the entrant to come in at a large scale and risk strong reaction from existing firms or come in at a small scale and accept a cost disadvantage. Both are undesirable options.

Question 10

The power of suppliers will be enhanced if they are able to maintain a credible threat of forward integration.

Accepted Answer

A supplier group will be powerful when the supplier group poses a credible threat of forward integration. This provides a check against the industry ability to improve the terms by which it purchases.

Question 11

Developments in technology and other innovations can create new industries and alter the boundaries of existing industries.

Accepted Answer

Developments in technology lead to new products and services and improve how they are produced and delivered to the end user. Innovations can create entirely new industries and alter the boundaries of existing industries.

Question 12

By inviting customers to write online reviews, Amazon used crowdsourcing to build value to its offer.

Accepted Answer

One of the smartest moves by Amazon was to invite its customers to write online reviews. The customers are neither paid nor controlled by the company, but the content that they create adds enormous value to other customers and, therefore, to Amazon.

Question 13

A demographic trend in the United States, the aging of the population, has important implications for the economic segment (in terms of tax policies to provide benefits to increasing numbers of older citizens).

Accepted Answer

In our discussion of the general environment, we see many relationships among the various elements. For example, a demographic trend in the United States, the aging of the population, has important implications for the economic segment (in terms of tax policies to provide benefits to increasing numbers of older citizens).

Question 14

The Porter five-forces model is designed to help us understand how social attitudes and cultural values impact U.S. businesses.
E. Porter has been the most commonly used analytical tool for examining the competitive environment. It describes the competitive environment in terms of five basic competitive forces.

Accepted Answer

The five-forces model developed by Michael

Question 15

A major sociocultural trend in the United States is the increased educational attainment by women.

Accepted Answer

Increased educational attainment by women in the workplace has led to more women in upper management positions. Given such educational attainment, it is hardly surprising that companies owned by women have been one of the driving forces of the U.S. economy.

Question 16

It is not important to consider the potential impact of government regulation when developing new innovations.

Accepted Answer

Over time, government regulations often have a tendency to become increasingly complex. Political processes and legislation influence environmental regulations with which industries must comply. Government legislation can also have a significant impact on the governance of corporations.

Question 17

The power of a buyer group is increased if the buyer group has less concentration than the supplier group.

Accepted Answer

A buyer group is powerful when it is concentrated or purchases large volumes relative to seller sales. If a large percentage of a supplier sales are purchased by a single buyer, the importance of the buyer business to the supplier increases.

Question 18

Technological innovations can create entirely new industries and alter the boundaries of industries.

Accepted Answer

Developments in technology lead to new products and services and improve how they are produced and delivered to the end user. Innovations can create entirely new industries and alter the boundaries of existing industries.

Question 19

The competitive environment consists of many factors that are particularly relevant to company strategy. This includes competitors, customers, and suppliers.

Accepted Answer

The competitive environment consists of many factors that are particularly relevant to company strategy. These include competitors (existing or potential), customers, and suppliers.

Question 20

The five-forces model helps to determine both the nature of competition in an industry and the profit potential for the industry.
E. Porter describes the competitive environment in terms of five basic competitive forces that affect the ability of a firm to compete in a given market. Together, they determine the profit potential for a particular industry.

Accepted Answer

The five-forces model developed by Michael

Quiz 2: Analyzing the External Environment of the Firm: Creating Competitive Advantages

Buyer power tends to be higher if suppliers provide undifferentiated or standard products.

Globalization provides opportunities to access larger potential markets and a narrow base of production factors such as raw materials, labor, skilled managers, and technical professionals.

Research shows that many immigrants to the United States are prodigious job creators. This supports legislative battles to increase the number of H-1B visas for foreign workers.

Crowdsourcing is used by companies to develop products.

Supplier power tends to be highest in industries where products are vital to buyers, where switching from one supplier to another is very costly, and where there are many suppliers.

In some industries, high switching costs can act as an important barrier to entry.

There is generally a weak relationship between equity markets (e.g., New York Stock Exchange) and economic indicators.

The Internet is a leading component in the rising emergence of digital technology.

Industries characterized by high economies of scale typically attract fewer new entrants.

The power of suppliers will be enhanced if they are able to maintain a credible threat of forward integration.

Developments in technology and other innovations can create new industries and alter the boundaries of existing industries.

By inviting customers to write online reviews, Amazon used crowdsourcing to build value to its offer.

A demographic trend in the United States, the aging of the population, has important implications for the economic segment (in terms of tax policies to provide benefits to increasing numbers of older citizens).

A major sociocultural trend in the United States is the increased educational attainment by women.

It is not important to consider the potential impact of government regulation when developing new innovations.

The power of a buyer group is increased if the buyer group has less concentration than the supplier group.

Technological innovations can create entirely new industries and alter the boundaries of industries.

The competitive environment consists of many factors that are particularly relevant to company strategy. This includes competitors, customers, and suppliers.